AP: GOP may OK tax increase that Obama hopes to block

[Kindred]

GOP may OK tax increase that Obama hopes to block

By CHARLES BABINGTON, Associated Press – 23 hours ago

WASHINGTON (AP) — News flash: Congressional Republicans want to raise your taxes. Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, right?

Apparently not.

Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned. By their own definition, that amounts to a tax increase.

The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a "payroll tax" on practically every dime they earn.

There are other differences as well, and Republicans say their stand is consistent with their goal of long-term tax policies that will spur employment and lend greater certainty to the economy.

"It's always a net positive to let taxpayers keep more of what they earn," says Rep. Jeb Hensarling, "but not all tax relief is created equal for the purposes of helping to get the economy moving again." The Texas lawmaker is on the House GOP leadership team.

The debate is likely to boil up in coming weeks as a special bipartisan committee seeks big deficit reductions and weighs which tax cuts are sacrosanct.

At issue is a tax that the vast majority of workers pay, but many don't recognize because they don't read, or don't understand their pay stubs. Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

As part of a bipartisan spending deal last December, Congress approved Obama's request to reduce the workers' share to 4.2 percent for one year; employers' rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1.

Obama cited the payroll tax in his weekend radio and Internet address Saturday, when he urged Congress to work together on measures that help the economy and create jobs. "There are things we can do right now that will mean more customers for businesses and more jobs across the country. We can cut payroll taxes again, so families have an extra $1,000 to spend," he said.

Social Security payroll taxes apply only to the first $106,800 of a worker's wages. Therefore, $2,136 is the biggest benefit anyone can gain from the one-year reduction.

The great majority of Americans make less than $106,800 a year. Millions of workers pay more in payroll taxes than in federal income taxes.

The 12-month tax reduction will cost the government about $120 billion this year, and a similar amount next year if it's renewed.

That worries Rep. David Camp, R-Mich., chairman of the tax-writing Ways and Means Committee, and a member of the House-Senate supercommittee tasked with finding new deficit cuts. Tax reductions, "no matter how well-intended," will push the deficit higher, making the panel's task that much harder, Camp's office said.

But Republican lawmakers haven't always worried about tax cuts increasing the deficit. They led the fight to extend the life of a much bigger tax break: the major 2001 income tax reduction enacted under Bush. It was scheduled to expire at the start of this year. Obama campaigned on a pledge to end the tax break only for the richest Americans, but solid GOP opposition forced him to back down.

Many Republicans are adamant about not raising taxes but largely silent on what it would mean to let the payroll tax break expire.

Republicans cite key differences between the two "temporary" taxes, starting with the fact that the Bush measure had a 10-year life from the start. To stimulate job growth, these lawmakers say, it's better to reduce income tax rates for people and for companies than to extend the payroll tax break.

"We don't need short-term gestures. We need long-term fundamental changes in our tax structure and our regulatory structure that people who create jobs can rely on," said Sen. Lamar Alexander, R-Tenn., when asked about the payroll tax matter.

House Majority Leader Eric Cantor, R-Va., "has never believed that this type of temporary tax relief is the best way to grow the economy," said spokesman Brad Dayspring.

The nonpartisan Congressional Budget Office says payroll tax reductions give the economy a short-term boost. But it says the benefit is bigger if employers get the tax break instead of, or along with, workers.

Some top Republicans have taken a wait-and-see approach, expecting the payroll tax issue to be a bargaining chip in the upcoming debt reduction talks.

Neither House Speaker John Boehner, R-Ohio, nor Senate Minority Leader Mitch McConnell, R-Ky., has taken a firm stand on whether to extend the one-year tax cut.

Most GOP presidential candidates also are treading lightly.

Former Massachusetts Gov. Mitt Romney did not flatly rule out an extra year for the payroll tax cut, but he "would prefer to see the payroll tax cut on the employer side" to spur job growth, his campaign said.

Former House speaker Newt Gingrich said Republicans will fall under increasing pressure to extend the payroll tax cut. If they refuse, he said in a recent speech, "we're going to end up in a position where we're going to raise taxes on the lowest-income Americans the day they go to work."

Many Democrats also are ambivalent about Obama's proposed tax cut extension. They are more focused on protecting social programs from deep spending cuts. Some worry that a multiyear reduction in the tax designated for Social Security could undermine that program's health and stature.

For decades the payroll tax generated more revenue than the Social Security paid out in benefits. The excess was used to fund other government operations. Last year, however, Social Security benefits began outstripping revenue from its designated sources, forcing the program to start tapping its "trust fund" of government obligations.

Copyright © 2011 The Associated Press. All rights reserved.

http://www.google.com/hostednews/ap/article/ALeqM5hcv66ONtPUG-K0C2EstqsYBU77yg?docId=5e01f49a8f5546578066437dd437299d

How much hypocritical bull**** is this? The GOP is fighting tooth-and-nail to a keep a "tax cut for the rich" from expiring, but are ok with allowing a "tax cut for poor families and the working class" to expire?

This line pisses me off especially: "says Rep. Jeb Hensarling, "but not all tax relief is created equal for the purposes of helping to get the economy moving again." considering when you tax the lower income brackets, you DIRECTLY impact money that is spent on all the consumer goods that drive the economy and...well make the rich rich. Whereas when you tax the rich, you merely impact an almost insignificant fraction of their savings.

[dockeryfan]

And this is why every person making less than 250K should not be voting for the Republican Party.

[pointyfootball]

Come'on Dock. Did you read the same article I did? I think both parties are F'd up. However, from what I read (not all of it TBH), this is a proposal to reduce SS tax. How is that saying the "GOP wants to increase the tax on the poor". It's that kind of talk that makes politics so ridiculous.

I do have (as one of the "rich", according to IRS) major issue with a incredibly large contingent of Americans, already paying no federal income tax, possibly having their tax bill reduced even more, especially when that is their "retirement" money. Especially with the state the budget is already in.

[AsburySkinsFan]

Wow this is a far different tune than they sang when talking about keeping the tax rate low for those earning more than 250k per year.

That worries Rep. David Camp, R-Mich., chairman of the tax-writing Ways and Means Committee, and a member of the House-Senate supercommittee tasked with finding new deficit cuts. Tax reductions, "no matter how well-intended," will push the deficit higher, making the panel's task that much harder, Camp's office said.

BTW if one more frickin' Republican talks about cutting taxes to stimulate job production without actually tying the tax cuts to job creation I may very well get violent!

BTW before anyone goes off on that last statement as if it were anything other than hyperbole, I want to offer this disclaimer for those who are subject to knee-jerk unthinking respinses.

[Thiebear]

Edit: Ahhh hold on:

As part of a bipartisan spending deal last December, Congress approved Obama's request to reduce the workers' share to 4.2 percent for one year; employers' rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1.

as long as they pay for the 120billion into SS from discretionary spending, I have no issues with extending it another year.

but: paying less in means getting less out, and the baby boomers are hemorrhaging that prgram with early retirements and the enormous amount of them coming in at the same time, on top of a bad economy that appears to be failing again.

[Burgold]

I have no way to really knowingly compute this, but I wonder for that percentage that pay no federal income taxes, I wonder what percentage of their income is taxed?

If they're living paycheck to paycheck we know that a fair percentage goes to sales tax, then there's gas tax, social security, medicare, and other taxes. Are the poor really under taxed comparitively or is this a diversion used by some to protect the "rich"

I'm really not sure what that number is... though I do like Jon Stewart's point about if we take half of all the bottom 50%'s possessions and wealth (not just income, but half of what they have) we'll wind up at about that 800 billion level that Republicans said was meaningless by raising taxes on the top two percent by two points.

Seems to me that Republicans want to squeeze water from a stone while ignoring a fresh water lake.

[Madison Redskin]

I have no idea what this means.... anyone want to explain that article in regular people speak?

Incredibly partisan with no summary i could follow?

Obama wants to extend the payroll tax cut, but the GOP does not. House GOP members, such as Eric Cantor, oppose the extension of the tax cut on the theory that it will not help the economy and will increase the deficit.

[Thiebear]

thanks MadisonRedskins.

[Bang]

If anyone hasn't figured out they've sold us out by now, then they never will figure it out.

~Bang

[JimboDaMan]

Come'on Dock. Did you read the same article I did? I think both parties are F'd up. However, from what I read (not all of it TBH), this is a proposal to reduce SS tax. How is that saying the "GOP wants to increase the tax on the poor". It's that kind of talk that makes politics so ridiculous.

I do have (as one of the "rich", according to IRS) major issue with a incredibly large contingent of Americans, already paying no federal income tax, possibly having their tax bill reduced even more, especially when that is their "retirement" money. Especially with the state the budget is already in.

If you read it you would know it's not a proposal to reduce anyone's taxes, tt's a proposal to keep the payroll tax the way it currently is. Procedural differences aside, it's the same as the income tax cut situation - a temporary tax cut whose expiration will increase taxes unless the cut is extended.

I'm impressed by the tap dancing by Republicans on this one. Especially impressed by Romney's preference for taking the tax break away from low-income employees and giving it to their employer instead. Awesome.

[twa]

How much has it helped the economy?....is it worth extending?

When are we gonna pay for it and how?

I'm in favor of ending all payroll deductions,but then ya gotta fund programs

[Larry]

But this tax cut isn't important, because it is a 2% tax cut for every person who has a job.*

That's not nearly as important as a 2% tax cut for the top 5%.

* Actually, because of the ceiling, it's a 2% cut on earned income up to around $100K. Earned income above that level is already completely exempt from this tax, anyway.

----------

Actually, my favorite part of the quoted portion of the article is:

Republicans cite key differences between the two "temporary" taxes, starting with the fact that the Bush measure had a 10-year life from the start.

The Bush tax cuts on "the rich" were passed on the justification that they would only last one year. "And when you take this one-year tax cut, and spread it over the next ten years, then look how small this tax cut looks, compared to the surpluses we're forecasting. We can afford it."

They've been extended for 10 years, because of the GOP shouting that permitting a temporary tax cut to expire is "voting to increase taxes".

[Baculus]

How much has it helped the economy?....is it worth extending?

When are we gonna pay for it and how?

I'm in favor of ending all payroll deductions,but then ya gotta fund programs

How come those questions aren't asked when it comes to the Bush tax cuts, especially those for the top wealth holders? Heck, the GOP STILL want to continue the Bush tax cuts for another decade, even though most economists agree that it will add trillions to the debt, on top of the trillions it has already added, if it is continued.

And they are the ones who cry "class warfare!" Yeah, it's class warfare, alright, and they are warring for the upper class.

It's amazing -- the GOP cry "foul!" when it comes to taxing the rich, but then we hear about "fair taxes:" and how "51%Q of Americans don't pay any taxes!" which is a lie, BTW, and now this Republican opposition to the payroll tax break extension.

The GOP are apparently a bunch of aristocrats. They claim that "taxing the rich" don't do anything to reduce the debt or deficit, but then they claim more Americans need to pay "their fair share," which means the lower and middle classes.

---------- Post added August-22nd-2011 at 02:03 PM ----------

This Stewart bit says it all:

http://tpmlivewire.talkingpointsmemo.com/2011/08/jon-stewart-highlights-conservative-hypocrisy-on-class-warfare-video.php?ref=fpb

[Ellis]

For someone who hasn't had a raise in close to 4 years, a rise in my taxes would be very unwelcomed. The only positive I've had in the last year is that now that I'm married, my wife and I consollidated much of our bills and insurance to lower our overall expenses. Family plan phone, vehicle insurance, health insurance, etc, has been reduced.

Neither one of us want a rise in our taxes. And to be perfectly blunt, we do everything right. We pay our taxes on time, pay our bills on time, live life well, yet all the **** ups of our country get the special programs to bail themselves out of their screwups. We're getting sick of it. Special programs should be reserved for good behavior, not screw ups.

CTRL+ALT+DEL = Washington Politics

[twa]

Usual circus

[Baculus]

Usual circus

Yes, the usual GOP circus, with their clown-like antics.

It'll be even more amusing if Michele "The End of the World is Coming Soon" Bachmann becomes its presidential candidate.

Your Republican compatriots sure know how to pick 'em! Heh.

[Riggo-toni]

Not being a class warrior, normally I would probably agree with the GOP on this in terms of cold-hearted economic efficiency, but the economy is being weighted down by high levels of consumer debt, so keeping the payroll tax low is perhaps the most effective economic stimulus available. It certainly makes more economic sense then spending billions more on frivolous social programs.

[Baculus]

Not being a class warrior, normally I would probably agree with the GOP on this in terms of cold-hearted economic efficiency, but the economy is being weighted down by high levels of consumer debt, so keeping the payroll tax low is perhaps the most effective economic stimulus available. It certainly makes more economic sense then spending billions more on frivolous social programs.

Putting more money in the hands of the consumer is probably one of the best ways to stimulate the economy. It's hard to create more jobs of demands for products and services are lower, which is why the GOP's "trickle down" economic philosophies are out-of-place right now.

[Madison Redskin]

Could one of our conservative brethren explain why (1) letting the Bush tax cuts expire amounts to a tax increase, but letting the payrol tax cuts expire does not and (2) why tax cuts stimulate economic growth, but the payroll tax cut does not?

[pointyfootball]

Went back and read in full. First, it's mind-boggling reminder that you, and your employer, pay 12.4% of your income into social security. That's a lot of money to pay for people, who didn't save, to retire at a young age (62).

Second, I'm fairly conservative, but I'm of the opinion that taxes have to go up across the board, coupled with significant-to-drastic spending cuts, in order to get the budget under control. GOP doesn't want taxes raised and Democrats don't want social spending cut, so we all suffer with the situation we are in.

Thirdly, the reason social security is with us is because people can/will not save money for their retirement. Yet Obama's quote is that this will allow them to have an extra $1,000 to spend each year. I would be all for this payroll tax reduction if each taxpayer that got the benefit could prove that the money went into an IRA.

[tdigle]

And this is why every person making less than 250K should not be voting for the Republican Party.

I've always voted Republican, but something like this would definitely sway my vote towards the Party of the Burro.

I'm a little skeptical of this article, though; we have numbskulls on Capitol Hill, but no one can be this glaringly stupid. Seriously, this sounds like something The Onion would right.

[DeaconTheVillain]

There's something so puzzling to me about the American mentality. So many people simply refuse to help themselves here or pursue what is in their own self interests. Perhaps they cannot figure out what is in their own self interests. The example I love are the numerous individuals earning less than 40k a year yet who are strongly politically active in favor of tax cuts primarily geared at people earning millions, while those same millionaires simultaneously vote to strip away social programs benefiting the people earning < 40k a year in no small part to compensate for the cost of their tax cuts. And if you point this out, you must be a tree hugging socialist which is of course just a hair away from a gay communistic anarchistic terrorist Satanic Muslim. God bless America.

To stereotype for brief moment: I see to types of what I would call "classic republicans."

The first type is the CEO multi-millionare who says I worked hard to get where I am and therefore shouldn't be penalized (taxes) more for my hard work. And often, his argument is very fair.

The second is the blue collar, check to check living, god fearing, homophobic, liberal hater. Will often ***** about how liberals want to take away guns and give jobs to illegals. And this (stereotypical) right winger often doesn't realize they are probably voting against what is best for them financially and socially. Despises same sex marriage and is willing to vote R based on that alone.

The 2nd type of right winger is who type #1 counts on in order to stay where they are. They give #2 their god and their gun and songs of freedom in exchange for their vote.

its problem...and very sad

[SkinsHokieFan]

Can I just opt out of SS?

Please? Let me just pocket that money and my employer pocket the tax they pay on me?

[Kindred]

There's something so puzzling to me about the American mentality. So many people simply refuse to help themselves here or pursue what is in their own self interests. Perhaps they cannot figure out what is in their own self interests. The example I love are the numerous individuals earning less than 40k a year yet who are strongly politically active in favor of tax cuts primarily geared at people earning millions, while those same millionaires simultaneously vote to strip away social programs benefiting the people earning < 40k a year in no small part to compensate for the cost of their tax cuts. And if you point this out, you must be a tree hugging socialist which is of course just a hair away from a gay communistic anarchistic terrorist Satanic Muslim. God bless America.

This is the end product of unchecked capitalism - everybody (companies, individuals, black/white, rich, poor, etc) looking out for themselves first over the rest of society. As is the nature of things, the wealthy and the corporations are winning, but they are shooting themselves in the foot by exploiting their customers to the point where the economy is collapsing.

[twa]

Could one of our conservative brethren explain why (1) letting the Bush tax cuts expire amounts to a tax increase, but letting the payrol tax cuts expire does not and (2) why tax cuts stimulate economic growth, but the payroll tax cut does not?

As to the first, because it is a dedicated tax(in theory)

Cutting payroll taxes will stimulate the economy,but just like the Bush cuts you are gonna have fun getting them put back....as we see here.

can you tell me why we should cut a dedicated tax(to a program already facing issues) when they can't even stay within a budget with general revenues and spending?

I'm fine with keeping the cut,it will make a excellent excuse for reducing benefits